One book on economics

I have been reading a few things about economics recently. I just finished Economics in One Lesson by Henry Hazlitt.

My favorite thing about the book is its format. It is a lot of small relatively self-contained chapters. Each one deals with a different topic and uses real world examples.

As Hazlitt writes in the first chapter:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

A broken window is then considered as an example of unseen effects. Imagine a vandal smashes a window. The first and obvious result is the building's owner will buy a new window. This means business and income for the window factory. Spectators might say the breaking of the window was good because of the business activity it created. However, it neglects what the window's owner would have done instead of replacing the window. If he was planning to spend the same amount of money that afternoon to buy a new suit, he will go without the new suit. Instead of the suit maker getting a sale, the window factory gets a sale that day. Nothing is created because of the broken window. However, casual spectators only see the new window and not the new suit that was never bought.

Hazlitt explains how different groups of people band together and seek economic favors at the expense of everyone else. He then examines government subsides to farmers. While the subsides provide farmers with cash so they can do more farm related things, other people lose out. All of the taxpayers lost money they would have spent on other things so the farmers could get some extra cash. The subsidies did not create new business, they only transferred money from non-farmers to farmers.

One sad thing was how the book talked about a few billion dollars in government spending as if it was a lot of money. In the decades since the book was written only things in the hundreds of billions of dollars seem like a lot of money in government terms.

The book would be better titled Why the Government should stay out of Economics in One Lesson. For a few sections in the middle I was bored because I knew how the examples would be analyzed according to the earlier principles.

I would recommend you read the book. It was easy to read and talked through a lot of examples.